Practices Regarding Service Invention Between Taiwan and China
published on 24 Jul 2014
Topics involving service invention have become popular and general issues of late. Service invention may cover the ownership of rights, remuneration, and the scope of exploitation of a granted patent. Studies regarding service intervention have shown that more than sixty percent inventions filed for patents are brought out through work performance under the umbrella of an employment relationship. Governments have been aware that sufficient protection for the rights and interests of employee-inventors will encourage more service invention to be administered and eventually further the innovative power of a nation. The relevant laws and practices between Taiwan and China are summarized as below:
1. Legislation
The provisions regarding service invention are stipulated in Articles 7 to 10 of the Taiwan Patent Act. The provisions specify the legitimate rights and obligations for invention creations that are completed in an employment or a contractual relationship, including the ownership of patent application rights and that of granted patent rights, as well as inventor’s remuneration.
On the other hand, China has corresponding provisions provided in Articles 6, 7, 8 and 16 of the Chinese Patent Law, as well as Rules 12, 13, 76, 77, and 78 of the Implementing Regulations of the Patent Law of the People’s Republic of China. The provisions cover the definition of a service invention, ownership of granted patents, rewards and remuneration. Recently, the State Intellectual Property Office has drafted the Regulations on Service Invention to further regulate the ownership of rights and the obligations to report a service invention, as well as the supervision and inspection of the competent authority.
2. Definition
According to the Taiwan Patent Act, the definition of a service invention refers to an invention “made by an employee in the performance of his or her job duties.” A service invention broadly encompasses an invention, a utility model, or a design completed within the scope of his or her job duty in an employment relationship.
For an invention creation that is not related to work performance under the requirement of a job duty, but made through utilization of the employer's resources or experience, and also the employer does not oppose thereto, such an invention creation will not be regarded as a service invention based on the Taiwan Patent Act.
Whereas in China, a service invention includes two aspects: 1. an invention creation made by an employee in execution of the tasks of the employer; and 2. an invention creation made by taking advantage of the material and technical means of the employer. More specifically, according to the Implementing Regulations of the Patent Law of the People’s Republic of China, a service invention refers to any invention creation made: 1. in the course of performing his or her own duty; 2. in execution of any task, other than his or her own duty, entrusted by the employer; and 3. within one year from his retirement, resignation or from termination of his or her employment or business relationship with his or her former employer, where the invention creation relates to his or her original duty, or related to other task entrusted to him or her by the former employer.
A temporary staff member of an entity is still regarded as an employee defined under the Chinese Patent Law. Further, “the material and technical means of the employer” recited in the Patent Law refers to money, equipment, spare parts, raw materials of the employer and technical data that are not disclosed to the public, according to the Implementing Rules.
In contrast to the definition of service invention in Taiwan, China covers a broader scope. If an invention, a utility model, or a design is made through utilization of the employer's resources, even though such an invention creation may be unrelated to his work performance, the invention creation will still pertain to a service invention in China, while Taiwan does not share the same conclusion. In addition, Taiwan does not specifically regulate by statutes the ownership of an invention made after the termination of employment, but leaves the possible ownership dispute to be resolved by the civil court. In contrast to this practice in Taiwan, any invention creation made within a year from the employee’s resignation, retirement or change of employment would still pertain to a service invention under the definition of Chinese Patent Law, unless the invention creation is irrelevant to his previous job duty.
3. Ownership of rights
According to the Taiwan Patent Act, an employer of a service invention is entitled to apply for a patent and owns the patent rights, if the patent is granted. In return for the ownership of patent rights, the employer should pay reasonable remuneration to the employee who completes the invention. If an agreement for the ownership of rights is made between the employer and the employee, the agreement shall prevail.
Similarly, the Patent Law of China also stipulates that the employer is entitled to apply for a patent for a service invention and owns the granted patent rights. However, where a service invention is made by utilization of the employer’s resources and the ownership of rights has been agreed in a contract between the employer and the employee, the contractual provisions shall prevail.
In other words, unlike Taiwan, ownership of rights for any service invention made in performing tasks of the employer is not negotiable in China. No private agreement can trump the default rule in which the employer shall enjoy the right to apply for a patent and the granted patent rights.
4. Remuneration
Regarding compensation of an inventor or designer who completes the service invention, a general concept of “reasonable remuneration” is stipulated in the patent law in Taiwan. As to what extent the remuneration would be deemed reasonable, the Patent Act does not provide further guidance, neither does any method of calculation or in any form of making payment be suggested. For this reason, the formulation of a reasonable remuneration as well as the form of making payment shall be referred to the agreement made by both parties, or be resolved at the court if there is any dispute arises in this regard.
In comparison, though the Taiwan Patent Act respects the autonomy of contracts in a free market, the Chinese Patent Law gives more specific guidance in consideration of a reasonable remuneration. Article 16 of the Chinese Patent Law stipulates that an employer who has been granted a patent shall give a reward to the inventor or creator of the service invention; and upon exploitation of the granted patent, pay a reasonable remuneration based on the extent of spreading and application, as well as the economic benefits yielded from exploitation of the patent. The Implementing Regulations further provide that parties may enter into a contact with regard to the method of payment, amount of the reward and remuneration according to the prescribed laws. But if there is no agreement made regarding the amount of the reward for a granted patent or that of remuneration for the exploitation of the patent, the Implementing Regulations have set a statutory minimum amount for a reward, and also a statutory minimum percentage that shall be provided to the inventor or creator annually for the profits gained from exploitation of the granted patent.
In view of the differences regarding laws and practices of service invention between the two jurisdictions, companies and research institutes should be aware that, while one may heavily rely on judicial autonomy and autonomy of contracts, the other may provides stringent rules for the calculation of incentives as a means to protect employee-inventors or employee-creators.
For any questions relating to this topic, please contact us at cjchen@tsailee.com.tw |